ERCs shall be Actual Emission Reductions (AERs) as defined in District Rule 1401 and calculated below.

Initial calculation of AERs shall be as follows:

(a) For the shutdown of an emissions unit;

AER = Historic Actual Emissions

(b) For modifications of an emission unit, consisting solely of the application of control equipment or the
implementation of a more efficient process;

AER = (Historic Actual Emissions) x (Control Efficiency)

(c) For all other modifications or limitations on operations of an emission unit;

AER = (Historic Actual Emissions) - (Proposed Emissions)

AERs shall thereafter be adjusted to reflect emissions reductions which are otherwise required by Federal,
State or District law, rule, order, permit or regulation, as follows:

(a) AERs shall be adjusted to reflect only the excess reductions beyond those already achieved by, or achievable
by, the emissions unit using Reasonably Available Control Technology.

(b) AERs shall be adjusted to reflect only the excess reductions beyond those required by applicable District
Rules and Regulations.

(c) AERs shall be adjusted to reflect only the excess reductions beyond those required by any applicable proposed
District Rules and Regulations which have been taken to public workshop.

(d) AERs shall be adjusted to reflect the excess reductions beyond those required by any control measures identified
in the District's Air Quality Attainment Plan or contained in the State Implementation Plan for the District which
have not yet been implemented in the form of District Rules and/or Regulations.

Readjustment of AERs and ERCs

(a) If an AER is eligible for readjustment the APCO shall calculate the readjustment and reissue the ERC pursuant
to the provisions found in District Rule 1402(D)(5).

(B) Discounts of Emission Reduction Credits

ERCs which are calculated from emission reductions created by a military base designated for closure or downward
realignment shall be discounted five percent (5%) to improve air quality.